ReallyVeryFoolish wrote:Not quite as deep red on the portfolio balance sheet. And the last few days have been kinder to my portfolio. Since I retired at the end of July, I have been able to commit some new money to the portfolio. Including an approx £4,000 transfer in of AVC from an ex-Equitable Life plan, and an ISA subscription. Altogether, approx £33,000 new money has been thrown into the damaged goods portfolio repair plan. Even so, the portfolio is still £46,000 below it's highest valuation earlier this year. There's bound to be more bumps in the road, Brexit, US election, pandemic etc. But as long as my Plan C part time consulting work continues for a while longer, and hopefully an improved market, I look forward to being back where I started in time. It's been a very painful lesson learned this year, but the plan continues to work. And that's the purpose of this thread, have a plan, stick to it, adjust it to reflect the changing landscape, don't give up.
I read your posts today and am glad that you (and the market) have substantially repaired your portfolio. And your plan C looks brilliant! Congratulations.
Surprisingly, I experienced the opposite when I retired in 2001. My portfolio then was dominated by growth companies and growth investment trusts. The damage the market drop caused to my portfolio seemed huge. Many investments went to 10% of their value in less than a year and I “lost” an amount similar to the value of an average house at the time. (Some may remember Logica, Misys, Baltimore, Trafficmaster, Telewest, Vodafone and the other culprits!
From memory, the companies that suffered less and recovered well were utilities, food, beverages, healthcare, tobacco etc. The "essentials" of life with regular turnover not affected by the economic cycle.
Ironically the experience in 2000/01 changed my approach and I moved a significant portion of my portfolio away from growth shares and bought more income generating stocks and quite a few of Luniversal’s “basket of seven” income ITs.
Whilst a few of my income shares have dropped a lot recently, they paid such good dividends over the last 17 or 18 years that they paid for themselves some time ago! And some HYP shares like IGG have done amazingly well, others like National Grid, Pennon, Unilever, Reckitt, Diageo, United Utilities, Intercontinental Hotels and even Tesco haven’t done badly over the 15 years or so since I bought them. Of course, I too hold Lloyds Bank and one or two other shockers.
My attitude after 2000 was to ignore advice to have a concentrated portfolio. I am probably far too diversified with over 100 holdings (and vastly more if one takes into account the contents of ITs and OEICs). This may mean that my portfolio has not grown as fast as it might. But it has appreciated at around 8% a year (after tax) and it is much less volatile than a more concentrated portfolio. It is currently down 5% from its all-time high.
My conclusion is that it is not a good idea to completely leave the income sector. It may have its day again. The bit of the HYP approach I like is “strategic ignorance”. Too many investors claim they can predict which company is better run than another - and remembering their posts it’s often instructive to see how wrong the predictions were.
And of course, Covid comes along and shows that none of us could predict the future!
One lucky decision of both of us was to invest in Fundsmith. Terry rightly predicted that companies supplying essentials would be survivors. So far he’s right and his fund has grown to be my biggest investment.
So hopefully you may find that in a few years time your portfolio hiccup will be just that!
And do make the most of your retirement!